Chicago on the Make
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In January 2004, City Hall was ensconced in scandal once again, when the Chicago Sun-Times discovered serious improprieties in the city’s $40-million-per-year Hired Truck Program. Trucking companies with ties to both organized crime and high-ranking city officials were being awarded lucrative contracts for doing little or no work, and while nothing could be directly pinned on Daley, there was too much circumstantial evidence to dismiss. Some 25 percent, or $47.8 million, of all Hired Truck money went to companies from Daley’s Eleventh Ward power base, companies in the program had contributed more than $100,000 combined to Daley’s campaigns, and Daley’s brother John had underwritten insurance policies for a handful of them.44 As federal prosecutors continued on with the Hired Truck scandal, evidence surfaced that Victor Reyes, a close Daley advisor and head of the powerful Hispanic Democratic Organization (HDO), had rigged hiring and promotion exams to reward city workers, including members of the HDO, for their political activities on behalf of Daley and other candidates.
All this to say that between 1995 and 2005, there was almost never a moment in Chicago when the city did not seem, at least in the eyes of its mostly black and Latino low-income residents, to be a place of monumental injustice—where big businessmen, mobsters, and people with personal ties to the Daley family and its close friends got fat, while poor blacks and Latinos were being gunned down on street corners and tortured in the back rooms of police stations. Even if one could ignore the litany of corruption scandals that appeared in the pages of the dailies and utter, “That’s just the way it is,” Chicago slapped the have-nots in the face every time they ventured near the Loop. A simple drive north on Lakeshore Drive took one through the Chicago of clean, tree-lined streets, marinas full of shiny white pleasure boats, well-manicured green park spaces, tidy beaches with volleyball nets fronting a sparkling blue Lake Michigan, rapidly rising real estate values, and neighborhoods with names befitting the class of people living there: the Gold Coast, Lincoln Park, and Lakeview. The many thousands of residents in the Cabrini-Green Homes, a quadrant of mid- and high-rise block-like structures with fenced-in balconies, where the Gangster Disciples ran a drug trafficking operation that earned them an estimated $3 million per year before its demolition in 2010 and 2011, were just a short walk away from the upscale Gold Coast neighborhood. William Julius Wilson made an important point when he emphasized the social and spatial isolation of the black poor in Chicago, but one should not take this idea too far: African Americans in the city understood quite well how the other half lived. But even though poor people of color regularly confronted such “savage inequalities,”45 they showed little interest in addressing them by investing in the electoral process. In the mayoral election of 2007, for example, overall voter turnout was just over 30 percent, with 70 percent of blacks and 80 percent of Latinos casting their votes for Richard M. Daley. In 1989, by contrast, Daley had garnered under 10 percent of the black vote.
So what accounted for the lack of opposition to Daley among blacks and Latinos and his virtual invincibility at the polls over his more than two decades in office? Some of the explanation brings us back into the cogs of the political machine he inherited from his father. The tactics City Hall deployed against Gator Bradley, as well as the various illegal schemes that created both jobs and lucrative contracts for Daley supporters, reveal the workings of a political machine that resembled the one run by Richard J. Daley in the 1960s and 1970s. Also similar was the absolute authority Richard M. Daley wielded over his city council, which came in part from a 1978 law giving the mayor the power to fill city council vacancies. By 2002, he had appointed one-third of the members of the city council, which may help explain why he did not have to use his veto power even once between 1989 and 2005. As political scientist Dick Simpson’s research has found, two-thirds of the members of the city council voted with the mayor 90–100 percent of the time.46 These aldermen stood with Daley because, as in the old days, the mayor controlled a spigot of patronage funds for irrigating their wards. But even if the Hired Truck scandal seemed to indicate that, in spite of the Shakman decree, a system of jobs for political supporters was still in operation, what really moved things during the Richard M. Daley era was “pinstripe patronage”—contracts for lawyers, consultants, and various other service providers, as well as enormous infrastructural subsidies and preferential policies for the developers who erected the city’s office buildings and retail centers, as well as for the companies who filled them. It was in this area in particular that Richard M. Daley’s patronage machine represented something of a paradigm shift from that of his father. Pinstripe patronage, in the high times of the global-city era, was not about demanding small donations from thousands of loyalists and giving out contracts to put new toilets in City Hall but rather about attracting five- and six-figure campaign donations from multimillionaires in exchange for seven- and eight-figure contracts, new tax loopholes, and a range of lucrative subsidies. Even in his very first campaign, in 1989, Daley had amassed an unprecedented $7 million in donations, with some 30 percent coming from just 1 percent of his contributors. Moreover, in addition to traditional support from contractors and construction unions, some two-thirds of Daley’s donations came from law firms (like the famous Sidley & Austin, where Barack Obama met his wife, Michelle Robinson), banks, commodities and stock traders, businesses, and consulting firms enmeshed in the global economy.47
Moreover, if Richard J. Daley had used some accounting tricks to veil the city’s financial situation, his son took this practice to another level of sophistication. Critical to Richard M. Daley’s pinstripe patronage juggernaut, for example, was his tax increment financing (TIF) program, a labyrinthine public financing method that he used to create a virtual “shadow budget” of over $500 million—about one-sixth of the city’s total budget—to fund large development projects, infrastructural improvements, and beautification efforts.48 The original idea behind TIFs, which began to be increasingly adopted in municipalities across the nation in the 1980s with the drying up of federal urban renewal funds and sharp reductions in federal development grants, was to create a mechanism that would channel capital towards improvements in distressed or blighted areas where development might not otherwise occur.49 In a typical TIF program, property tax revenues in excess of the amounts determined to be needed within a certain geographical area are allocated to a special discretionary fund for “public” projects. The thinking is that these projects, in turn, will theoretically improve the area and thus lead to increased tax revenues that will replenish the TIF fund and likely add to it in following years. Yet like so many other progressive-minded policy approaches that arrived in postwar Chicago, the problem with Chicago’s TIF program was that City Hall took the money and ran away from the progressive goals attached to it, and it did so behind closed doors. In fact, TIFs, by nature, are ill-suited to socially progressive ends—the construction of affordable housing or the creation of middle-class jobs—because of their adherence to a commercial logic contingent upon sharp increases in property values.50 Making matters worse in Chicago was the way in which Mayor Richard M. Daley incorporated the TIF system into his pinstripe patronage machine. While TIF projects involving private companies had to be approved by a city council vote and thereby made public, the large portion of funds used for neighborhood improvements—new schools, sidewalk and street repaving, and the upgrading of park and recreation facilities, for example—were not subject to public scrutiny, allowing them to be used as patronage rewards to distribute among aldermen loyal to the Daley machine.
This lack of transparency enabled the creation of a public funding system that reinforced inequalities rather than ameliorating them, a situation that remained largely obscured until Ben Joravsky, a journalist for Chicago’s leading alternative newspaper, the Chicago Reader, managed to get his hands on some internal TIF documents. According to Joravsky’s investigative work, TIFs skimmed $1 billion in property taxes off the city’s revenues between 2003 and 2006.51 Indicative of how
unevenly this money was spread across the city, in 2007 the downtown LaSalle/Central TIF district added some $19 million in revenues while the Roseland/Michigan TIF district—the area often referred to as “the hundreds,” where Derrion Albert was murdered—brought in a mere $707,000.52 Moreover, in 2009, a year in which Daley announced the need to eliminate jobs and cut back services because of a $500 million budget deficit linked to the country’s financial crisis, the city council voted in favor of allocating $35 million from the LaSalle/Central TIF district to subsidize the move of United Airlines into seven floors of the Willis Tower.53 City officials justified the offer by arguing that United’s presence in the Willis Tower, in addition to solving the embarrassing problem of vacant floors in Chicago’s most prestigious skyscraper, would bring some 2,500 jobs to the city. This was a far better deal for the city as a whole than the $56 million in public subsidies paid to Boeing in 2001, when it moved its headquarters from Seattle to Chicago, bringing some 450 jobs with it.54
As the enormous subsidies offered to Boeing and United reveal, the maintenance of Chicago’s image as a high-flying global city was a top priority for the Daley administration. In this sense, Daley was no different from his homologue in New York City, Rudolph Giuliani, who in December 1998 offered the New York Stock Exchange a historically unprecedented $900 million in cash along with a package of tax breaks and other subsidies to prevent its move across the river to New Jersey. Next to this, the money spent on Boeing and United seemed more than reasonable, and the addition of these high-profile corporations helped to offset the psychological blows of losing Amoco, Ameritech, and Inland Steel to corporate takeovers. City officials provided further justification by repeatedly referring to the rosy estimates of certain economists about the “multiplier effects” of having all these highly paid white-collar workers around the downtown area. During the United affair, for example, Second Ward alderman Robert Fioretti, whose jurisdiction stretches from the bustling Loop westward into the depressed area around East Garfield Park, argued that the airline’s employees would spend an average of $6,700 in the downtown area—on, presumably, martinis, steaks, athletic club memberships, and a range of elite services. But the multiplier effects of this consumption stopped well short of Fioretti’s constituents on the black West Side, where the challenge was to lure low-cost food retailers in order to combat the problem of “food deserts”—large areas in which residents have little or no access to healthy food sources.
This area of the city had been devastated in 2003, when just to the west of it, in West Garfield Park, candy maker Brach’s Confections, Inc., closed a factory that provided more than a thousand jobs. With one of its signature items, Candy Corn, a nauseatingly sweet, waxy-textured corn-kernel facsimile commonly eaten by children around Halloween, Brach’s did little to boost Chicago’s global-city credentials, so Daley was unwilling to offer more than $10 million to try to retain its one thousand jobs—not nearly enough to dissuade the company from moving its operations into Mexico. Ironically, this was about the same amount City Hall would draw from the Northwest Industrial Corridor TIF five years later at the request of a developer seeking to convert the abandoned Brach’s factory into a warehouse and distribution center, which, according to the developer’s own estimate, would provide just seventy-five permanent jobs.55 The project would, however, eventually pay for itself in future income tax revenue, much of which would find its way back into the Northwest Industrial TIF, where it would be spent, of course, at the discretion of City Hall.56
That more than $10 million was allocated to a project that promised to create just seventy-five jobs in an area whose 17.3 percent unemployment rate ranked among the highest in the city in 2007 and whose principal high schools, Marshall and Austin, reported attendance rates around 50 percent revealed that Chicago’s TIF program had become almost entirely unhinged from any reasonable notion of the public interest. And yet much of what made the city’s financing system patently unjust occurred under the radar. Unlike the machine of old, which was out on the streets taking bribes, pouring drinks, handing out turkeys, and dispatching thugs to make sure people voted “early and often,” Richard M. Daley’s well-oiled machine seemed to hum silently beneath the city. There were of course corruption scandals enough to raise eyebrows now and then, but it could be argued that these scandals, in the end, overshadowed and even legitimated the quasi-legal policies that were redistributing public capital upwards. That is to say, Operation Silver Shovel, the Hired Truck scandal, and many of the other tales of cronyism that made it into the dailies created a deeply flawed perception of Richard M. Daley’s “machine.” Mid-level city officials consorting with gangsters and taking middle-class bribes, private trucks idling in parking lots at a rate of $50 per hour, strings pulled to arrange jobs for political supporters—these scandals hardly scratched the surface of what was really going on with Chicago’s finances. They made Richard M. Daley’s administration look too much like Richard J. Daley’s machine, an idea that obscured how much the scale of injustice had changed since the early 1990s. And even if the TIF program enabled City Hall to veil some of its dealings, the details of the majority of expenditures were out there for everyone to see, provided they wanted to make the effort to do so.
But until the months before the mayoral election of 2007, when the whole country was reeling from the blow of the subprime mortgage crisis, few political organizations were willing to take on either the global city agenda or the neoliberal municipal policies that were imposing austerity on the poor and shifting so much of Chicago’s tax revenues to business interests downtown and elsewhere throughout the city. This was in part because, viewed from the perspective of its thriving downtown and surrounding areas, Chicago looked like a city that was clearly moving in the right direction. Mayor Daley had invested massively in both beautification initiatives and the upgrading of tourist attractions, especially around the downtown lakefront area, making Chicago a first-tier destination for both business travelers and tourists. In terms of beautification, City Hall pushed through a new landscape ordinance in 1999 that put more trees on sidewalks, more flower beds on the medians of avenues, more planters in commercial districts, and obligated developers and builders to incorporate aesthetically pleasing landscaping into their designs. Mayor Daley’s drive to beautify the city was so consuming that after visiting Paris, he ordered the installation of lights on the city’s bridges and skyscrapers in order to give Chicago a Paris-by-night feel.
His efforts to improve the city’s tourism infrastructure were nothing short of staggering: In 1991, a new baseball park for the White Sox opened thanks, in part, to $81 million of city financing. Between 1992 and 1994, City Hall kicked in some $35 million in infrastructural costs for the construction of the United Center, the new home for the Chicago Bulls professional basketball team. In 1995, it allocated $250 million for the renovation of Navy Pier. In 1996 it completed a $675 million expansion of McCormick Place, giving the city the most square footage of convention space in the nation. In 1998 it spent $110 million to reconfigure Lake Shore Drive in order to create a “Museum Campus” that gathered Soldier Field (the stadium of the Chicago Bears), the Shedd Aquarium, the Field Museum of Natural History, and Adler Planetarium on one massive green space by the lake. In 2003 it financed a $680 million renovation of Soldier Field. In 2004 it inaugurated the $475 million ($200 million of which came from private donations) Millennium Park, a spectacular twenty-five-acre green space bordering the Chicago Art Institute to the north and Grant Park to the west that includes the three-story polished stainless steel bean-shaped Cloud Gate sculpture, the fifty-foot-high interactive glass brick Crown Fountain, a 2.5-acre flower garden, a large outdoor ice skating rink, a 1,500-seat performing arts theater, numerous spaces for art expositions, and its centerpiece, a state-of-the-art outdoor music pavilion crowned with a spectacular stainless steel bandshell designed by Frank Gehry.57 In 2005, the Federal Aviation Administration approved an estimated $6 billion plan by the city to expan
d O’Hare Airport’s capacity by 60 percent. And in 2007, Chicago opened yet another addition to McCormick Place, the $850 million McCormick Place West building.58
All this was of course part of the global-city agenda laid out by the mayor’s planning advisors in the 2002 Chicago Central Area Plan, which called for a downtown district of revitalized green spaces, promenades, and waterfront attractions. “Chicago,” the plan asserted, “will retain its role as one of the world’s great crossroads cities, attracting businesses, residents, and visitors internationally. . . Its Central Area will be a preeminent international meeting place, easily accessible from major destinations around the globe via expanded O’Hare International and Midway Airports.”59 What was taking shape so spectacularly along Chicago’s lakefront was part of a larger trend of urban revitalization that grew out of the convergence of the new economy of tourism and the global-city agenda. One result was the development of what political scientist Dennis Judd refers to as a “tourist bubble”—an upscale commercial district in which “tourist and entertainment facilities coexist in a symbiotic relationship with downtown corporate towers.”60 All one needed to do was to take a long stroll down Michigan Avenue from the area around the John Hancock Center and the Water Tower Place shopping center all the way across the Chicago River to Millenium Park to understand Judd’s point. In this tourist-friendly swath of the city, restaurants, shopping centers, cafés, and bars catered to both tourists and daytime professionals. And yet there was much more to the overall plan than this. Chicago’s massive capital investments in its tourism and business services infrastructure during the 1990s, which helped make it the top business traveler destination and the fourth for overall domestic travel by 2002, were part of a larger strategy to assure economic growth in an era of advancing deindustrialization. According to one study, travel-generated spending increased the city’s sales tax revenues from $54 million in 1989 to $145 million in 1999. By 2007 domestic and international travelers to Chicago were spending more than $11 billion annually, a sum that contributed over $217 million in local tax revenues and generated some 130,000 jobs.61